Boomers Expect to Rely Heavily on Social Security in Retirement

Thirty-eight
percent of middle-income Baby Boomers—those with a household income between
$30,000 and $100,000 and less than $1 million in investable assets—expect Social
Security will be their primary source of income in retirement, up from 30%
before the financial crisis of 2008, according to a study by the Bankers Life
Center for a Secure Retirement.

In lockstep with this, 43% of middle-income Boomers planned on primarily
relying on personal savings in retirement, prior to the recession. Today, that
is only 34%, according to the study, “10 Years After the Crisis: Middle-Income
Boomers Rebounding But Not Recovered.”

A scant 2% of middle-income Boomers think the economy has fully recovered, and
65% say they haven’t felt any personal benefit from a bounce back. Of this
group, 52% say their savings are lower than they were before the recession, and
40% say they are not earning as much. Sixty-eight percent are worried they will
be hit with yet another financial crisis in their lifetime.

Prior to the financial crisis, 45% expected to retire debt-free, and today,
that is only 34%. Previously, 23% expected they would be able to leave an
inheritance to their heirs, but today, that is only 16%. Nonetheless, 92% of
Boomers still plan to retire. However, 48% plan to work either full-time or
part-time in retirement—up from 35% before the crisis.

Perhaps one of the reasons their savings are lower is that the recession
has prompted 74% of Boomers to change their investment choices, with 28% moving
into conservative funds.

These
Boomers’ dismal outlook is grounded in fact, according to Bankers Life. Between
2007 and 2010, the inflation-adjusted median household income in the U.S. fell
nearly 7%—and more strikingly, the median net worth of middle-income households
fell 39% and homeowners lost an average of 55% of the value of their home.

“Social Security was designed to be a safety net, not a primary replacement for
savings or income,” says Scott Goldberg, president of Bankers Life. “Those who
are in or near retirement should consider the various ways they can create
future income to help achieve a secure retirement. There are products readily
available in the marketplace that can help.”

The Internet-based survey was conducted among 1,000 middle-income Boomers
between the ages of 52 and 70. The full report can be downloaded here.